Nicholas Gelfman and Gelfman Blueprint, Inc. (GBI), a New York corporation, are facing the lawsuit filed by the US Commodity Futures Trading Commission (CFTC) with the U.S. District Court for the Southern District of New York on the counts of practicing the Ponzi scheme involving Bitcoin to defraud investors and misappropriate their funds, while providing fake account statements and reports.

According to the case filed by the CFTC, within the period from January 2014 through January 2016, GBI and its CEO Nicholas Gelfman were involved into the Ponzi scheme they operated to solicit over $600,000 from about 80 investors. The scheme was presented under the guise of allocating the money into the pooled commodity fund allegedly using special mathematics and algorithms processed by the “Jigsaw” computer trading software.

The filing accuses the defendants of misleading the investors as the strategy was completely fake and the reports on the company operation and performance were forged too. The complaint further states that the defendants used the invested funds to support their Ponzi scheme paying the old investors out of cash received from new victims.

In order to conceal misrepresentation and absence of any activity leading to losses, the perpetrators published bogus performance reports to the investors presenting fake positive results in Bitcoin trading. Besides, Gelfman arranged a false cyber-attack committed on their computers to hide losses and investor funds misappropriation.

In its case the CFTC seeks recovery of the funds for affected investors and disgorgement of profits gained in violation of the Commodity Exchange Act and CFTC Regulations along with a series of other bans, penalties and permanent injunction.